Accounting 2301 Exam 1 with all Correct & 100%
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3 forms of business organization ✔Correct Answer-sole proprietorship, partnership, corporation
Sole proprietorship ✔Correct Answer-A business owned by one person
advantages of sole proprietorship ✔Correct Answer--simple to establish
-owner control
-tax advantages
Partnership ✔Correct Answer-business owned by two or more persons associated as partners
advantages of a partnership ✔Correct Answer--simple to establish
-shared control
-broader skills and resources
-tax advantages
Corporation ✔Correct Answer-A business organized as a separate legal entity owned by
stockholders
Advantages of Corporations ✔Correct Answer--easier to transfer ownership
-easier to raise funds (it's easier for people to be stockholders by investing small amounts of money.)
-no personal liability
What are the main questions external parties, such as investors and creditors, have about the
business? ✔Correct Answer-Investors- Is the company earning a satisfactory income? How does
one company compare in size and profitability to another company?
Creditors- Will this company be able to pays its debts as they come due?
Common stock ✔Correct Answer-total amount paid in by stockholders for the shares they
purchase
What are the claims investors and creditors have on a business? ✔Correct Answer-Investors in a
corporation receive shares of stock to indicate their ownership claim
Creditors- can specify a payment schedule
In the event of financial difficulty, _______________ claims must be paid before stockholder's claims.
✔Correct Answer-creditor's claims
Bonds ✔Correct Answer-directly borrowing money from investors by issuing debt securities
Liabilities ✔Correct Answer-amounts owed to creditors (in the form of debt or other obligations)
Types of liabilities ✔Correct Answer-note payable- money borrowed for delivery truck
bonds payable- have to be paid by a particular date some years in the future
, Dividends ✔Correct Answer-cash payments made to stockholders
Liabilities, common stock, and dividends fall under ________ activity ✔Correct Answer-Financing
activity
Once the company has raised cash through financing activities, it uses that cash in __________
activities ✔Correct Answer-investing
Investing activities involves ✔Correct Answer-the purchase of the resources a company needs in
order to operate
(purchasing computers, delivery trucks, furniture, and buildings)
Resources owned by a business are called ✔Correct Answer-assets
Different types of assets ✔Correct Answer--cash
-Property, plant, equipment
-Investments in other corps
-supplies
-accounts receivable
-Inventory
-Land
Once the business has the assets it needs to get started, it begins ✔Correct Answer-Operation
Revenue ✔Correct Answer-the increase in assets or the decrease in liabilities resulting from the
sale of goods or the performance of services
How can a company gain interest revenue on debt securities? ✔Correct Answer-from investments
Types of revenue ✔Correct Answer-sales revenue, service revenue, interest revenue
assets with shorter lives come from ✔Correct Answer-operating activities
ex. supplies
Longer lived assets are purchased through ✔Correct Answer-investing activities
goods available for future sales to customers are assets called ✔Correct Answer-inventory
expenses ✔Correct Answer-the cost of assets consumed or services used in the process of
generating revenue
Types of Expenses ✔Correct Answer-costs of goods sold:
selling expenses (salesperson salaries), marketing expenses, administrative expenses, interest
expenses, income taxes, utilities
Other liabilities ✔Correct Answer-accounts payable, interest payable, wages payable, sales taxes
payable, property taxes payable, and income taxes payable.
Net income ✔Correct Answer-when revenue exceeds expenses
Net loss ✔Correct Answer-when expenses exceed revenue
Verified Answers |Already Graded A+
3 forms of business organization ✔Correct Answer-sole proprietorship, partnership, corporation
Sole proprietorship ✔Correct Answer-A business owned by one person
advantages of sole proprietorship ✔Correct Answer--simple to establish
-owner control
-tax advantages
Partnership ✔Correct Answer-business owned by two or more persons associated as partners
advantages of a partnership ✔Correct Answer--simple to establish
-shared control
-broader skills and resources
-tax advantages
Corporation ✔Correct Answer-A business organized as a separate legal entity owned by
stockholders
Advantages of Corporations ✔Correct Answer--easier to transfer ownership
-easier to raise funds (it's easier for people to be stockholders by investing small amounts of money.)
-no personal liability
What are the main questions external parties, such as investors and creditors, have about the
business? ✔Correct Answer-Investors- Is the company earning a satisfactory income? How does
one company compare in size and profitability to another company?
Creditors- Will this company be able to pays its debts as they come due?
Common stock ✔Correct Answer-total amount paid in by stockholders for the shares they
purchase
What are the claims investors and creditors have on a business? ✔Correct Answer-Investors in a
corporation receive shares of stock to indicate their ownership claim
Creditors- can specify a payment schedule
In the event of financial difficulty, _______________ claims must be paid before stockholder's claims.
✔Correct Answer-creditor's claims
Bonds ✔Correct Answer-directly borrowing money from investors by issuing debt securities
Liabilities ✔Correct Answer-amounts owed to creditors (in the form of debt or other obligations)
Types of liabilities ✔Correct Answer-note payable- money borrowed for delivery truck
bonds payable- have to be paid by a particular date some years in the future
, Dividends ✔Correct Answer-cash payments made to stockholders
Liabilities, common stock, and dividends fall under ________ activity ✔Correct Answer-Financing
activity
Once the company has raised cash through financing activities, it uses that cash in __________
activities ✔Correct Answer-investing
Investing activities involves ✔Correct Answer-the purchase of the resources a company needs in
order to operate
(purchasing computers, delivery trucks, furniture, and buildings)
Resources owned by a business are called ✔Correct Answer-assets
Different types of assets ✔Correct Answer--cash
-Property, plant, equipment
-Investments in other corps
-supplies
-accounts receivable
-Inventory
-Land
Once the business has the assets it needs to get started, it begins ✔Correct Answer-Operation
Revenue ✔Correct Answer-the increase in assets or the decrease in liabilities resulting from the
sale of goods or the performance of services
How can a company gain interest revenue on debt securities? ✔Correct Answer-from investments
Types of revenue ✔Correct Answer-sales revenue, service revenue, interest revenue
assets with shorter lives come from ✔Correct Answer-operating activities
ex. supplies
Longer lived assets are purchased through ✔Correct Answer-investing activities
goods available for future sales to customers are assets called ✔Correct Answer-inventory
expenses ✔Correct Answer-the cost of assets consumed or services used in the process of
generating revenue
Types of Expenses ✔Correct Answer-costs of goods sold:
selling expenses (salesperson salaries), marketing expenses, administrative expenses, interest
expenses, income taxes, utilities
Other liabilities ✔Correct Answer-accounts payable, interest payable, wages payable, sales taxes
payable, property taxes payable, and income taxes payable.
Net income ✔Correct Answer-when revenue exceeds expenses
Net loss ✔Correct Answer-when expenses exceed revenue
